Smith & Williamson, a Top 10 firm, have now just gone ahead with their merger with financial planning and investment firm, Tilney. The merger has been delayed from early 2020 due to the proposed transaction structure reported by the Financial Conduct Authority (FCA) and with the disruption of the COVID-19 pandemic. It is now going ahead after both companies have agreed on a new transaction structure; to create an integrated wealth management and professional services business worth £45bn. Global investment firm, Permira, has invested in this merger as well as private equity specialist, Warburg Pincus, who are also co-investing in the business.
What are the top 10 UK accountancy firms?
Smith & Williamson, was ranked no.12 in the Accountancy Daily Top 75 firms annual survey and is one of the top ranking accountancy firms in the UK. Every year the earnings are reviewed and top 100 accountancy lists are created; this is to establish the best accountancy firms to work for around the world. The top 10 accountancy firms in the UK include the Big Four (PWC, Deloitte, EY, KPMG) as well as BDO, Grant Thornton UK, RSM, Smith & Williamson, Mazars, PKF UKI.
Smith & Williamson and Tilney merger to go ahead; So, what is a merger then?
So, what exactly is a merger, when would a company need to merge and how can that be beneficial for the companies involved? Many accountancy firms have merged to create bigger and better companies; that their clients will appreciate as well as their employees. Mergers between large and small companies are a great way to expand on each other’s companies; and offer more growth for their employees. Companies can also want to merge with others to develop their expertise; and to expand their firm in other areas of accountancy. For example, when BDO merged with Consolid8, that opened BDO to a number of niche areas such as technology, e-commerce and franchise sectors.
How has the pandemic affected accountancy companies when merging?
According to Accounting Today, before the pandemic, small sized accountancy firms may not have the same technological advantages are larger firms and some may not be ready to move to a more consultative client base so some partners have found it difficult with their growth planning. On top of this during the pandemic, the financial stability of some companies can now be unpredictable; as we don’t know how the industry can be affected during and post the pandemic; so securing a merger deal during this time can be quite difficult.
Another way the pandemic can affect the way mergers are done is when companies are evaluating the need to merge; a firm’s value can drop if their client revenue goes down due to the impact of the pandemic; this can now play a part in how mergers are done and negotiated moving forward.